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tv   Taking Stock With Pimm Fox  Bloomberg  March 6, 2014 9:00pm-10:01pm EST

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>> this is "taking stock" for thursday, march 6, 2014. i'm pimm fox. canadian airlines have been battered by this year's winter when it -- whether. plus, seeing its stock takeoff and the blue skies. the founder will display in his involvement with the show "house of cards" and how he competes with getty images. and come fly with me. yes, we will talk about frank sinatra and whiskey. but first, headlines from my
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radio cohost, carol massar. >> thank you. the ceo of sony entertainment america is the down. sony says it was a a mutual agreement to not extend his contract. he oversees the playstation game console. boeing will pay pensions for 69,000 nonunion employees and an executive. they are shifting benefit payments to a 401(k) style plan as it works to cut costs. the changes will take effect january 1, 2016. and these headlines are just crossing that allergens is buying safeway for about $40 per share. albertsons is owned by cerberus capital. back over to you. >> thanks, carol massar. i want to move into the business of the airline industry. air canada and others operate in north america and they have had to deal with winter weather. just last month, the airline
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forecasted a drop in first quarter profit because of the storms. also, there's the weaker canadian dollar. the president and chief executive officer of air canada joins us now from our toronto bureau. great to have you on "taking stock." outlined for us what the strategy is for air canada in order to deal with the severe winter storms and the effect it has had on the financials of the air carrier. >> thank you for that. we have had the dynamic in the past two or three months, which has been probably the most severe winter weather that we have seen in two decades. this is in terms of our network approach and has had an impact on our bottom line. we think, mercifully, it seems to be over. we have had some flight cancellations and when you cancel flights, you do save on fuel. we have tried to minimize the denied boarding, and we have
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announced a mitigation program and by the end of the year we do expect to have a $50 million impact to our december results, and perhaps a similar number in our first quarter. we think that is capable of being mitigated, but the second part of your question was around the canadian dollar. >> i just want to know whether any part of that reduction plan is any part of that at risk right now? >> know, we are fully on track and expecting our 15% target that we put on the marketplace. it is a 2012 chasm comparison. we are using that 2012 chasm and expecting to reduce that by 15% over a five-year time frame. and we expect to mitigate both
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the impact of the severe weather as well as the canadian dollar impact to achieve it. >> can you give me insight into some of the things you are considering, revenue, additional fees, for example. >> we have put together air canada vacations with a u.s. dollar surcharge. in some markets that has stuck. we are looking at other markets at the appropriate pricing modifications. we have also seen some improvement in the canadian dollar in the last little while. and our stock rebounded somewhat in relation to it. the u.s.-canadian dynamic is such that we received a billion dollars in u.s. dollar revenue. we have about $1.5 billion in hedges in place. whenever the canadian dollar is low, it is best to have inbound visitors to canada. we are looking at some cost strategies. >> tell us a little bit about
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roush -- rouge and how that figures into the strategy of air canada right now. >> we built this leisure brand as a separate carrier within air canada. the idea behind it is not to create some form of ultra low-cost carrier, because we fully appreciate that is not feasible in the context of a full-service carrier. what we are looking to do is to reduce our costs on some leisure routes where we always he -- where we already have a good presence. fun destinations -- think of the caribbean, florida, california, arizona, las vegas, places like that. and internationally, places like athens, barcelona, lisbon, etc. these are markets that we are either not making inadequate margin or we are losing money. what we have done -- we are either not making an adequate
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margin or we are losing money. we have done some things to that our costs and we are bang on expectations. >> what about hiring? >> we are hiring flight attendants. our approach at rouge is to build a distinct altar from the mainline brand. -- a distinct culture from the mainline brand. we have been training with disney world. we have a partnership with disney world, who has been training our employees. we think they have a very superior customer service dynamic. we have been launching rouge in western canada and the overall expectation is that the rouge aircraft will deliver 21% lower
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cost on the narrowbody and 29% on the wide-body 3com -- through a configuration of labor savings. -- of cutting costs and labor savings. >> at least as far as joe biden is concerned, you fly into and out of laguardia would air canada. i wonder what your response is to his or marks that laguardia is a third world operation. >> look, i won't get into a bashing of laguardia right here. but i will say that laguardia is one of our very important destinations in the united states and the eastern seaboard. it is often depressing to see the level of delays that arrive there. a rise there. -- the level of delays that arise there.
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one thing i could say is that we would certainly like to see some improvement there. >> let's talk about the actual aircraft for a moment. airbus a-319 as well as the boeing 767 , and the move over torouge. what can you tell me about adding capacity, adding more seats into the aircraft? clique that has been a good strategy for rouge, as i said earlier, the higher density configuration, which is more consistent with a vacation brand. we have put extra seat on the airplane. we have introduced a premium economy product for people who are per pair to pay more then just the economy fare. and through this process, we have now started to, as i said earlier, convert into a profitable picture.
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we have two other aircraft issues that are coming up, which are not the mainline. we are bringing in the 787 dreamliners and we have also had the boeing 777 aircraft with a very dense configuration. >> the star alliance, give us an update picture of what is going on with star alliance and what innovations you can see for the future. >> in star alliance right now, it continues to be the largest and most comprehensive alliance in the world. we have 26 carrier. we had announced last december that we were looking at inviting india potentially into the fold, subject to their meeting our requirements on safety and operational integrity. that review is underway right
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now. india was an opportunity for us. we are also looking at opportunities in brazil. and at this moment, we have announced that we are going to expand our brazil product by inviting one there into the fray. the main driver of the star alliance is the loyalty program sharing that exists between carriers, as well as the connectivity. our objective is to deliver a seamless product to the customer. while that is very competent it to do with 26 carriers, we expect to have some fairly significant technological advancements over the coming year. >> i want to thank you very much for joining us. calin rovinescu is the chief executive of air canada. coming up, what would you do to earn straight a's in school?
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you will meet the president of study blue, an online study business designed to put your materials in the cloud and then in your head. ♪
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>> this is "taking stock" on bloomberg. i'm pimm fox. cristina alesci joins me with more of what we were saying at the beginning of the hour, that safeway is being bought by albertsons. tell us the details. >> server leads an investor group that brought albertsons, and now is buying safeway, combining the two supermarket chains to create a massive supermarket company with 2400 stores across the country. it is a $9 billion deal that amounts to about $40 per share for shareholders. most of it will come in cash,
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some of it funded -- all of it will come in cash, actually, i should say. some of the funding will come from previously announced asset sales, about $3.65 per share. $32.50 will come from directly -- will come from cache directive from cerberus. in looking at the geographic footprints from both safeway and albertsons, there is some overlap. we could see some costs being taken out, very significant cost. in the release, they talk about how maybe reducing costs for customers is a positive outcome of this deal. no doubt about it, since private equity is involved, there'll
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probably be a bit of store closings in the work. the fact of the matter is that the supermarket business has gotten tougher and tougher with the specialized competitors and the higher-end chains like whole foods pushing into this supermarket business. at the lower end, you have the walmarts of the world getting involved with selling food. that has squeezed the supermarkets in the middle and made it tough for them to operate. the theory is, by combining you get leverage and maybe a better way of operating efficiently and that is really what is going on here. >> i want to thank you very much, cristina alesci, reporting on a deal between safeway and albertsons by cerberus. worth about $1 billion. coming up, a company that makes robotic furniture and the challenges they face. also, a programming note full stop tomorrow is international women's day. at 10 40 5 a.m., the international speedway chief executive and at 11:00, the chief technology officer of cisco. ♪
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>> it is time for another installment in our series entitled small to big with lots of companies looking to make it big. one company makes chandeliers and tables that move by themselves. jessica wants everyone to feature her robotic furnishings, but she first has to figure out how to mass-produce her pieces while maintaining creative control. >> rock paper robot is a design firm that specializes in invention and fabrication of kinetic furniture. rotating tables, robotic chandeliers.
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i truly love and -- physics concepts and i want it to make new connections in the brain. rock paper robot is currently in a transition timeframe. i think we started with personalized handmade products because that is what i was capable of. and i would hire the cheapest person to do the job, which is most than myself, and then i would do it. this is not a good business model. you have to pick between the artists had and the entrepreneur hat. i can sell a high-end piece, or -- a high-end piece for 10 times more than i do if i was considered an artist. but i could only handle putting out one piece at a time. in order to be able to get to all these other people that i want to be able to do, i need to have some way to produce that volume. one of the big challenges for me is to be able to start to
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delegate what i need to have done to run the business, so i can move back into a more creative wall -- rate of roll. if i'm not ceo, that is fine. i did not want to just have a company. i wanted to make beautiful things. our latest product, we decided to mass-produce it. it comes down from the wall any length. we have 500 pre-orders for the table. now, we are about to increase our output by probably 1000 times. that is a tremendous amount of growth. >> from one small company looking to expand its operations to another that is followed -- focused on quality rather than quantity, rat furniture was started in 20 -- 2009 for the purpose of creating furniture with readily amenable -- readily available materials and processes.
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joining me now is the founder, ryan anderson. let's start off with how you got into the business. you go to college in san diego. did you always want to make richard echo >> no idea. i started off as a business major because i thought it would be a practical thing to do. my father is an architect. i assumed i would never follow in his footsteps. three years later, i found myself obsessed with the idea of going to architecture school and being an architect. three years after that i was deep into architecture school. >> university of texas in echo >> university of texas at austin. i was in my late 20's and thinking about what might path in architecture was going to be. the great recession came about. my friends who were graduating ahead of me were not getting jobs. there was nothing available. i recently had learned how to
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weld on a project in school. we built a house as part of the solar decathlon, which is a competition in washington, d.c. and i was one of the several team members to learn how to weld to build this house. after that, i found myself obsessed with the idea of welding, sticking no little -- sticking metal together and creating functional items. >> what a novel idea, functional items. >> for me, it was the tangibility that was important. i had a hard time wrapping my head around the service of architecture and how i would differentiate myself and live an exciting life in a career. i saw that passed through furniture, because it is a tangible thing that i can sit down and draw and build in the same day and get a reaction from others. >> you actually see people using it. >> at night, sitting around the barbecue that night and sitting on that furniture and enjoying it. >> i mentioned diversity of texas at austin pacifica because
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much of the furniture is made in austin. >> -- the university of texas at austin specifically because much of the furniture is made in austin. >> yes. we have focused the steel production there at a small shop. an architecture firm that was there was happy to take on the steel production and my wife and i were able to move to brooklyn and keep up the business and. that way we could stay in austin and not outsource it. outsourcing is collaboration. >> give us the results of all of this collaboration by telling us about your pieces and how much they cost and what sets them apart from other types of furniture. >> the business was founded in formally in my garage seven years ago and then couple more years after that more formally. when i was learning how to stick
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metal together, i was forced to come up with simple designs that could be built simply. having a business degree, i saw an opportunity to create designs that could be readily produced by others, not just me. someone who can make these pieces. >> what are some of the pieces that are may be defined -- that may be defined the rat furniture line? >> up to this point, it has been our steel tables and bar stools. our barstools are somewhat unique looking. they use limited material and they are a very straightforward, simple design, but they have an elegant sophistication to them. >> does google use them? i know they are one of your customers. >> cool does not use the barstools. -- google does not use the barstools. they bought some accessories for the café on campus. >> would you say that you are getting their success that you wanted? >> i hope so. it started with small jobs and i hope it will lead to bigger jobs with other companies. >> ryan anderson, cofounder and
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designer and rat furniture. coming up next, you will meet the person who made a billionaire impression last year. ♪
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>> ever wish you could study for something without actually having to lug around the big textbooks or even flash card? our next guest says it has the solution. it is an online storage where you can upload setting which uriel's store them in the cloud. horning as is the president and founder chris klundt. how do you describe study blue to those who have never ventured online?
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>> we are an online application on iphone, ipad, android, and on the web. we allow students to go online and create content and share that with their classmates and others trying to learn the same material. >> one of the things about testing is you are not supposed to look at the answers before you take the test. you're supposed to learn the material. how do you make sure that people are absorbing the information and not just copying from those who took the test previously echo -- previously? >> we think it is a learning experience where they try to see explanations and see ideas from those who are trying to master the material, but then also absorb it internally. take practice quizzes on your own, review the material, study it while waiting in line for the bus, while in bed, or after school at a coffee shop. >> a lot of people have taken to this. 2.7 million users.
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what is the percentage of college students that use study blue? >> we are crossing the 5 million user mark. we created over 220 million pieces of content. we like to say we are middle school to medical school today. about 66% university and 33% high school and middle school. >> what about the contributions that students make in an ongoing way? is there something to encourage them to stick with study blue? >> we really think it is about bringing in the power of the crowd. when students go online and they see that other people who have been there before them learning the same material have left a mark and they can see maybe how to fill the gaps with the information they are missing from the lecture, that encourages them to come back more. they can use it on their mobile device or on their laptop. at whatever point in the city
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process they are, they have access to the material. >> fill in the gaps about making money. what is the profit picture? how will you do that? >> we have two great fx going on. we have a content effect and a network effects. one thing we can do really powerfully is create an ultimate study guide, for example. if there are bunch of students in the course, they can all add their content and we can organize that material and eliminate the duplicates and give them a city guide that updates automatically. we charge nine dollars for that, or it is part of our subscription offering, which includes advanced tools for people looking to get more out of the platform. >> any plans to go public? what is next? >> we are just focused on building the best learning app and platform that we can for all student needs. we see a lot of uses outside the traditional classroom as well. we have bartenders learning militant -- learning recipes.
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we have yoga teachers learning new yoga poses. the ultimate vision is to be the place where anyone in the world who is trying to learn anything can come and be with the others who are learning the same thing. >> thank you very much, chris klundt, founder and president of study blue. my next guest says he likes to be under the radar. whether jon oringer likes it or not, he is on the radar postop he started chatter stock -- shutter stock and after listing it on the new york stock exchange, he became, to put it simply, a billionaire. tell people about something you are you -- and something new you are doing with shutter stock. you are giving it away. >> we have been building the company for many years now.
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i'm out in san francisco because we recently purchased a company that is a digital asset -- a digital tool for asset management company. >> why do that? >> we started with web-based selling to small and medium businesses. as we started to expand our offering for their needs, we started to realize that they needed to manage all the assets that they create everyday across all their departments. and all the ingredients that go into these assets that they eventually create our images -- are images. if we can penetrate more into the workflow, we believe we can sell more images. >> use the word images, and i guess that is in addition to all of the video. it is not just the still images that are part of the stock photo house anymore.
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it is now videos and having it in a variety of digital formats. >> yes, just like we started with images in 2003, back in 2005 we basically extended the ball -- the model to video. anyone can create a video today and upload it to us. many are using our stock footage. >> maybe you could describe that process one created in the opening montage of images for "house of cards." >> for "house of cards" we believe that time lapse images are being used. if you look at the credit roll, you will see that. they credit us. we don't know exactly where in there that they are using footage, but that is the thing. it is a high enough quality that it can be seamlessly integrated into the production without the
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final user knowing. >> tell us a little bit about the business of shutter stock and what you expect to accomplish in the next two or three quarters. >> we will continue to expand internationally. more than 70% of our business is outside the u.s. we are already in 150 countries. and we are just starting to get going in some of those places. creating the kind of search algorithms that we are working on, and making sure that in all of these languages, the users are able to find what they are looking for. that is our top priority. >> how do you combat the copyright issues or concerns over rights? >> we are committed to making sure that all of our contributors get paid for all of their images. that is why we watermark our imagery. we only show a low resolution image before you purchase. you have to go through the purchase process, provide us with a credit card, before you
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are able to download the high resolution image, which is different from other agencies out there. >> as far as usage of these images go, you constantly being given new images, people who come to shutter stock in order to sell their images. tell us how that works. >> we have 55000 and two bidders from all over the world. basically, anybody can -- 55,000 contributors from all over the world. a sickly, anybody can contribute. we go through them and decide which ones we want to accept into the marketplace.
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and we have about 10 years of experience about what images sell the best. the collection organically grows based on user demand and what our contributors are providing at that time. >> can you reveal what photos are the best? what images are in the most demand? >> it depends on the category. lots of vector images are used on websites and ipad apps. a lot of the instagram type filters have caused those types of image details to be in demand. you can actually do any search on shutter stock to see what is most popular at that time, and it changes constantly. >> one thing you do have to deal with this competition. getty images, for example, they are giving away images online. what is your thought on that? >> we have been competing with them for 10 years now. we are committed to continuing to build out our products and services and make sure that all of our buyers get what they need and that our contributors into new to get paid. we have paid out $200 million to our contributors in the past 10 years. we sold 100 million images last year. we sell 3 million images every second. we know a little bit about this business and we will continue to do what we are doing. >> do use film in your own life?
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>> i sometimes do, but mostly digital. it's a lot easier. >> jon oringer is the founder of shutter stock, joining us from san francisco. coming up on "taking stock," if you have ever purchased in on a mobile, you know that it is a dreadful experience. we have a roadmap to make it easier. ♪
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>> buying an automobile can be complex. sometimes it's a bit intimidating. how do you know if you are getting a fair price? joining us now to help sort this all out is karl brauer, the senior analyst at kelley blue book. he joins us from irvine, california. great to have you with us. i know that you know how to buy in automobile. let's start off with some of the
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tips you recommend people follow. it has to do a lot with expectations, doesn't it? >> you want to go into this process very aware and educated. the first one, of course, is to understand your car needs. you do not want to buy a car and find out later you should not have. you want to look at what you need versus what you want and also what you can afford. if you can do that, you are in a better position to make sure you get the right car. >> will come back to what you can afford in just a second, but what about number two? >> number two, you want to confirm the market price. you can look up the msrp quite easily, but you can also look at the market value of any car very easily. that means what people are actually paying for it. kelley blue book has a really good tool and it's easy to go on there to see what people in your area are paying for the exact car you are looking at. you should always do that before you go to the dealership.
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and you should arrange your own financing as well. that way, you have an understanding of what you will be paying every month. and then you have your loan rate and terms handled. you can get financing from a dealer, but why not go in there and have your own arranged to see if the dealer kenexa match or beat them. and if you can find the car at more than one dealership, then you have leverage. and finally, you want to read the fine print. people think you have decided on the price and the dealer has agreed and it's all done. that is the start of the deal. you have to get to the finance and insurance process. you want to make sure you pay the right fees and licensing. look at the fine print. ask questions if you have to. be careful about what you are being charged on top of the car price. >> in the process of making the purchase, should you back away from it for a day before you sign anything? sometimes things change. you get one price and you go away and the next day, oh,
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there's another special. something else just came in. >> you can almost never make a mistake by taking time and being patient, and maybe even waiting versus rushing through a car deal. if you can take your time and wait another day, if you think there might be an incentive deal coming down the line, it's ok to wait. >> all right, let's say, you cannot wait for your new economy car, i know you've got a list of three that you are recommending. tell us about number one, the mazda. >> the new mazda is stylish, fun to drive, very good gas mileage, and a lot of value for the dollar. this is a winner if you are looking for a good economy car. >> what about a family automobile? >> there are a lot of cars out there for families, big and small, vans, minivans, suvs. a car that is widely appreciated by people who own it and it gets great reviews is the subaru forrester. it is sedan sized and almost has
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a station wagon look to it, but it's got an elevated height and it comes with four-wheel drive a call most every subaru. and everyone who drive these cars, myself included, really enjoys driving them. it is a well put together package. >> there is a big gap in what you can pay for something like this, almost a $10,000 difference. these things can get expensive. >> which is kind of nice, if you think about it. you can throttle your budget up and down as you need. >> all right, throttle up to the luxury level. what kind of car will we see karl brauer in? >> the cadillac just came out recently and the coupe version was introduced at the detroit show. it is a beautiful car and it drives very well.
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it is a pretty serious competitor, and not just trying, but succeeding at offering a viable alternative to the em w3c read. cadillac has done -- the bmw three series. cadillac has done a great job. it is really well sorted, top to bottom. >> you mentioned the v6 there. tell people what kind of automobile you drove into get to your appearance today. >> [laughs] i drove in a 1974 pontiac firebird trans am. it is a one owner car with 18,000 miles on it. i tend to be a little eclectic. that is just me. >> karl brauer is the senior analyst at kelley blue book. coming up, frank sinatra actually used to drink jack daniels whiskey. now his name is on a special edition of the whiskey. we will take a closer look at how liquor companies are adding a shot of star power to their
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marketing efforts. that is next. ♪
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>> this is "taking stock" on bloomberg. i'm pimm fox. originally, the creator of bitcoin has denied involvement with the virtual currency. hoshino okamoto spoke to reporters outside his home saying he is not involved in bitcoin. earlier this week, an article was published saying that he is the creator of the controversial virtual currency. let's turn to the world of whiskey and other spirits. some of them even departed. celebrity endorsements, we know, our big news, and it would be harder to find a bigger celebrity endorsement dan frank
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sinatra, considering he's already passed away. old blue eyes passed away in 1998. but frank sinatra enterprises is going strong and it is teaming up with jack daniels to produce a tennessee whiskey called sinatra select. the story is in bloomberg businessweek in the etc. section. joining me here, laura greene as well as them a rosenbloom. -- emma rosenblum. whiskey from frank. >> for not trusting the -- so not trust select is what it called. >> we know that he consumed jack daniels whiskey. >> but he and never -- but he never endorsed it when he was alive. now they have partnered up and it is going extraordinarily high-priced. about $150 up to $250 per
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bottle. >> what makes this sinatra select any different than the regular jack daniels echo >> it is 90 proof as opposed to 80 proof. and they say it's got rich amber tones and it is an open task. i'm sure she can tell you why it is actually better. but it also comes with a book about frank sinatra's life and how he relates to jack daniels. >> wasn't frank thatcher buried with a bottle? -- wasn't frank sinatra area with a bottle? >> legend has it that he was actually there it with a flask of jack daniels. we know that he loved it. he chose to go onstage with it. he was introduced to it by jackie gleason in the late 1940's in new york city. he was a huge fan of jack daniels. what makes it special, besides the higher proof, is that they actually cut grooves into the
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wooden staves when they age that whiskey, giving the spirit more exposure to the wood, which they suggest will give it smoother character. >> what do you think echo will people be ordering -- what do you think? will people be ordering this at the flat iron room? >> i think people will go crazy for it. it is in popular demand now and they will run out of it, i would think. but also this is to give a halo effect to jack daniels. >> is celebrity that important when it comes to this special status? >> i think that is up for debate. mila kunis is now a celebrity endorser of jim beam. we will see how that works. but frank sinatra, we are looking at an iconic american symbol, and jack daniels is very similar to that. it can fit in your roadside dive bar and at a fancy wedding. >> they have done studies about how franken entre resonates with younger men. -- frank sinatra resonates with younger men.
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>> maybe he is still the chairman of the board. what makes the flatiron room so special? >> i've never been to the flatiron room, so i don't know what i could tell you. >> can you tell me that you met your husband at the flatiron room? >> the flatiron lounge. >> lounge, i beg your pardon. close enough for government work. >> it was an amazing place with amazing cocktails. the we have a whiskey collection that includes whiskeys from around the world. >> what is your favorite? >> whiskey is an occasion. that would be a whole other conversation, how about that? >> heather green is with the flatiron room. and emma rosenblum is with bloomberg businessweek. ♪
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